Question

The changes in account balances for Elder Company for 2018 are as follows: Assets $ 680,000 debit Common stock 350,000 credit Liabilities 190,000 credit Paid-in capital—excess of par 30,000 credit Assuming the only changes in retained earnings in 2018 were for net income and a $50,000 dividend, what was net income for 2018?

(A) $140,000.
(B) $150,000.
(C) $160,000.
(D) $170,000.

Answer 1

Answer:

Net income will be $160000

So option (c) will be the correct answer

Explanation:

We have given debt common stock = $680000

Credit liabilities = 350000

Credit paid in capital = 190000

And excess of par 30,000 credit Assuming the only changes in retained earnings

So 680000 = 350000+190000+30000+ retained earning

So retained earning = $110000

Dividend paid = $50000

So net income = dividend paid + retained earning = $110000+$50000 = $160000

So option (c) will be the correct answer